1) Editorial: In Freeport Permit Extension, Hard Questions Emerge

With Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, agreeing to work under a Special Mining Business Permit, or IUPK, from its current Contract of Work, or KK, the government is set to grant the company a new 20-year permit to continue its operations in Papua.

Under the new arrangement, the miner can renew its permit twice more, for 10 years each time, allowing it to operate in the country’s easternmost province through 2055.

For Freeport, this is great news; it heralds a rare moment of legal certainty.

But Freeport’s KK was due to expire in 2021 and it was only due to request an extension in 2019. That poses big questions: Why the rush to extend four years ahead of time? And why change the nature of the contract itself?

The government is obliged to answer these questions, which have given rise to speculation about all kinds of suspicious dealings.

We have reason to believe that the change of arrangement is just a form of legal manipulation to secure an early extension, in which the current ruling elites pushed for the extension before President Joko Widodo’s term in office ends in 2019.

From that we can conclude with almost near certainty that these elites — be they members of the president’s inner circle or of the ruling coalition — are receiving financial benefits from the extension.This benefit, if indeed it exists, comes at the expense of state revenue: Under the IUPK, Freeport’s tax rate goes down to 25 percent from the current 45 percent under the KK.

We warn the elites to think about future generations and the harmful consequences that this scheming will have on countless innocents. One day, you will be in their place.

Randy Fabi and Kanupriya Kapoo

Jakarta: Indonesian President Joko Widodo wants to open up the remote and impoverished region of Papua after decades of conflict and neglect, but will first need the backing of the military, parliament and separatists.

Palace officials said the president plans to free dozens of political prisoners, launch a slew of infrastructure projects, and confront the serious unemployment problem in the easternmost province of the Indonesian archipelago.

Papuan women wave the Indonesian flag during the visit of Indonesian President Joko Widodo. Photo: AFP

"The new approach will be more humane, with the aim of developing Papua more fairly," Mualimin Abdi, director of human rights for the justice ministry, told Reuters.

A small separatist movement has kept Papua under the close supervision of the military, more than 50 years after Indonesia seized control of the resource-rich area following the end of Dutch colonial rule.

Despite an abundance of forests and minerals, ordinary Papuans have seen little benefit with their schools, hospitals and infrastructure in dire straits due to rampant corruption.

Freed Papuan political prisoner Kimanus Wenda is hugged by a supporter. Photo: AFP

Mr Widodo has made developing Papua one of his top priorities and has already visited the region twice as president, announcing plans for a region-wide road network, fibre optic cable system, sport facilities and a major deep sea port.

Mr Widodo's predecessor, Susilo Bambang Yudhoyono, only visited Papua three times during his 10-year tenure.

Indonesian President Joko Widodo (right) attends a ceremony to grant five political prisoners clemency at a prison in Jayapura, Papua province. Photo: Antara

But in a clear indication of the difficult road ahead for the president, military chief Moeldoko quickly revised the president's statement saying foreign journalists would still need special permits to travel there because of security concerns.

"Opening up to the media and what we are doing with the political prisoners are all aimed at eventually reducing the role of the military in Papua," Eko Sulistyo, a member of the presidential office, told Reuters.

"It has to be done gradually."

The president wants to free more political prisoners and plans to ask for approval from parliament, where Mr Widodo's party only controls a minority coalition.

Army spokesman Wuryanto said "there has to be considerations before freeing the prisoners," but did not elaborate.

The president is also considering halting transmigration policies and introducing affirmative action for hiring indigenous Papuans in local government, which is currently dominated by migrants from Java and Sulawesi islands.

"If the approach is wrong, it's a fine line between wanting to be part of Indonesia and becoming a freedom fighter," Mr Sulistyo said.

Vanuatu has a new Prime Minister after Joe Natuman was ousted in a vote of no confidence in Parliament.

Sato Kilman, who was last week ousted as foreign minister, has been appointed as the new Prime Minister, beating opposition MP Ham Lini by three votes in Parliament.

The no confidence motion, which was filed by the opposition last week, was carried by 27 votes for and 25 against.

It was supported by three government MPs, including one minister, who crossed the floor giving the opposition the 27 votes needed to pass.

Our correspondent in Port Vila says the main reasons for ousting Mr Natuman was the suspension of 19 opposition MPs from Parliament last year and controversy surrounding the distribution of aid after Cyclone Pam, which destroyed much of the country in March.

Today's change is the 9th change of Prime Minister in Vanuatu in seven years, with no confidence motions being a regular feature in the country's politics.

Jakarta. As the government continues its negotiations with Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, and there are reports that the company will likely have its operating permit in Papua extended for another 20 years, observers are urging caution.

An official with Indonesia’s Energy and Mineral Resources Ministry said on Wednesday, after a two-hour meeting between Freeport Indonesia executives and ministry officials in Jakarta, that the miner agreed to work under a Special Mining Business Permit (IUPK), to replace its current “contract of work,” which is due to expire in 2021.

The IUPK will give the Indonesian government leverage over Freeport, unlike in the case with the contract of work, which means the two sides are on an equal footing, ministry spokesman Dadan Kusdiana said.

The old contract has long sparked nationalist sentiment, and resistance against Freeport’s Papua operations, among Indonesians who say the country did not receive a large enough piece of the pie.

“The ‘contract of work’ is based on equality between the state and the investor, but the special mining permit puts [the state in a] stronger [position] because the state can revoke the permit any time,” Dadan told a press conference.

With Freeport agreeing to work under an IUPK, the government is willing to extend its operating permit, although a final word on this is pending approval from President Joko Widodo, he added.

People’s aspirations

University of Indonesia (UI) law professor Hikmahanto Juwana is among those who were quick to urge caution in the ongoing negotiations. He said that despite the government’s claims of IUPK advantages, there were several issues that needed to be watched closely.

“Is this change of [contract] not a form of legal manipulation by Freeport to secure an early extension [on its operating permit]?” Hikmahanto asked, in a written statement.

He said based on prevailing regulations, the miner should only be able to request an extension to its working permit in 2019, two years prior to the expiry date of its current contract.

“But President Jokowi’s term in office will end by [that time]. In that situation, the president cannot make strategic decisions,” Hikmahanto said, referring to Joko with his popular nickname.

He added Joko and other government officials involved in the process might be facing charges if they sign deals they are not legally authorized to make.

Pointing out the far-reaching consequences, Hikmahanto said that if Freeport secured the IUPK this year, it would be able to continue its operations in Papua through 2035, and then get another 20-year extension until 2055.

He said that would be against the aspirations of the majority of the Indonesian people, who wanted the government to take over mining operations from foreign companies once their contracts expired.

State as majority shareholder

Marwan Batubara, the executive director of the Indonesian Resources Studies (Iress) think-tank, similarly warned both Freeport and the government of the possibility of legal violations as part of the mining giant’s attempt to have its permit extended before the due date in 2019.

The head of the energy think-tank said he understood Freeport’s need to ensure the economic feasibility of its planned investments in Indonesia — which included $15 billion for underground mining activities and $2.3 billion for the construction of a smelter in Gresik, East Java.

“If it has a contract lasting only for another six years, it won’t be economically feasible for them,” Marwan said. “They do need certainty.”

He warned, though, that regulations remained regulations and that these must be obeyed, suggesting that the president revise them by issuing a government regulation in lieu of law to accommodate Freeport’s needs without breaching any law.

Marwan also argued that in exchange for “loosening” the regulations, any new contracts must guarantee reasonable advantages for the people of Indonesia. One way to do this, he said, was by requiring Freeport to divest its shares to the Indonesian government and making the latter the majority shareholder.

Currently, the Indonesian government holds only a 9.36-percent stake in the miner, with Freeport-McMoran controlling the rest.

Under a 2014 government regulation on mining, Freeport Indonesia is required to divest 30 percent of its shares to Indonesian entities, with the government being the priority, by 2019. Freeport earlier this year announced it would divest 10 percent of its shares before October.

Legal revisions are also needed if the government plans to grant Freeport an IUPK, with current regulations stating the special permit is only meant for companies exploiting a maximum of 25,000 hectares of mines, Marwan said.

“Freeport, though, currently controls at least 125,000 hectares of mines in Papua,” he said. “The divestment should therefore include a clause where the government takes over 100,000 hectares, or at least 75,000 hectares of the mining areas to boost profits [for Indonesia].”

‘Sufficient leverage’

Several lawmakers welcomed the planned new framework, saying they were confident it would give the government sufficient leverage over Freeport.

“We think the state’s sovereignty will be more apparent with the [IUPK], compared with contracts of work,” said Satya W. Yudha of the Golkar Party.

“We appreciate the developments in the negotiations between the government and Freeport, with Freeport recently willing to change its contract before the expiry date,” Satya said. “That means Freeport is still committed to investing in Indonesia”

Another lawmaker, Kurtubi of the National Democratic (Nasdem) Party, said he also considered the IUPK option progress, although he admitted there were still some flaws, citing production cost calculations as an example.

“How much a mining business spends under an IUPK or contract of work [is unclear], the state doesn’t have that information. It doesn’t know — there is no control [over actual spending],” said Kurtubi, who was an independent energy observer before he was elected to the House of Representatives last year.

“There may be unusual costs which can reduce state revenues,” he added.

Ministry spokesman Dadan on Wednesday said it was still unclear when the IUPK would be granted and when it would take effect. But he added that the ministry and Freeport were aiming to finish all contract amendments before the end of July, based on a previously agreed memorandum of understanding between the two parties.

“The ministry has been looking for a solution so that Freeport’s operations can continue without violating any regulations,” Dadan said.

TEMPO.CO, Jakarta - The Indonesian government is planning to extend Freeport Indonesia's licence to operate in Papua for another 20 years. The Head of Public Relations for the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said that the final say will depend on whether Freeport manages to change its' working contract (KK) into a special mining license (IUPK) before its' original contract expires in 2021.

"By turning the KK into an IUPK, Freeport could extend their operations by 20 years," said Dadan, who explained the details of the meeting between the Minister for Energy and Mineral Resources, Sudirman Said, and Freeport Indonesia on June 10, 2015.

Dadan added that should Freeport's request for an IUPK is granted, then it would be allowed to operate in Papua until 2035.

It is known that the meeting was attended by Freeport McMoran's Chairman of the Board, James R Moffett, as well as Freeport Indonesia's Executive Director, Maroef Syamsuddin.

According to Dadan, the decision to allow Freeport to operate beyond 2021 was reached because the company requires some degree of certainty before it manages to invest in Indonesia.

It is also known that Freeport plans to invest US$17,3 billion - consisting of US$15 billion for the development of underground mines and infrastructure, and another US$2,3 billion for the construction of smelters. Freeport wants to operate beyond 2021 because its' could only expect a return of investment long after 2021.

Dadan explained that the acceleration of the permit conversion is a legal breakthrough that does not violate the terms set out in Law No. 4/2009 on Coal and Mineral Extraction, which said that the extension of permits could be submitted two years before the original contract expires.

According to Dadan, clause 169b of the law said that all KK will have to be converted into IUPK. By taking these clauses into consideration, Freeport could apply for an extension in 2019.

Maroef Syamsuddin said that it is important for companies to have assurances and certainty to their operations. "This really is a breakthrough. Now that we know for certain, we won't hesitate to invest," he said, before adding that Freeport will always adhere to the law in its' operations.

6) Mobile Brigade Headquarter Was Suspended Due to Obscurity of Land Handover

Wamena, Jubi – Papua Police Chief Inspector General Yotje Mende said the plan to build the Mobile Brigade Headquarters in Jayawijaya Regency should be temporarily suspended since the regional government has not gave a clue of location.

“Currently it has not been a deal yet about the location, I expect the regent could give clarification about this matter. About the construction, we will see. If the location was ready, we will propose to build it at least in the next year,” the chief told reporters in Wamena after the visit to Tiom, Lanny Jaya on Tuesday (9/6/2015).

He admitted the headquarters that previously planned to be built within this year could not be implemented due to location. “After visiting Wamena, I found the location is not clear yet. As recipient, I just wait confirmation from the regent and local parliament. So, I just wait because this grant is part of goods provided to us from the local officials,” he added.

Papua Police Chief admitted so far the police are still waiting the land handover from the local government and the construction could be started after the handover. “Thus, the construction of Mobile Brigade Headquarters has not been clear yet and we are still waiting about the location. We are ready to build after everything related to the land was clear,” he said. (Islami/rom)

Jayapura, Jubi – Abepura Prison Authority of Jayapura Municipality said they still owe Rp 638 million in catering expenses to third parties since 2014.

“In fact, the increasing number of prisoners would impact to increasing of the meal cost. We still owe Rp 349 million to third party for meal cost in 2014,” the head of Abepura Prison Bagus Kurniawan said.

The previous debt in 2013 amounted Rp 348 million just paid in 2015. I have the information said the debt in 2014 could not yet settled in 2015 or 2016,” Bagus said on Tuesday (9/6/2015).

He urged the police to be more selective in handling criminal cases. If not, it could be a burden for prison authority in term of meal cost and prisoners.“We expect the police could be more selective on light cases. Hold the process of named suspect because it would be a burden for prison authority in term of meal cost. For example, for the case of street fighting, it would better to resolve it though informal and kinship bonding. Do not take it to the court, because the prison has limitation in budget,” he said.

Meanwhile, the member of Commission I of Papua Legislative Council for Politic, Government, Legal and Human Right Affairs, H. Syamsunar Rasyid said the police must be smart in dealing with different cases. He said if the case was only the light violation, it could be informally resolved instead of taking to the court.

“The law obviously must be enforced, but for the light cases, I think it could be tolerated. Do not let it be a burden for prisons, such as Abepura Prison that until now still have debts for meal cost for the prisoners,” said Rasyid. (Arjuna Pademme/rom)

Jayapura, Jubi – Department of Labor and Population (Disnakerduk) Papua Province recorded as many as 519 foreign workers in Mimika, making them the majority of 857 foreigners who work in Papua.

The head of Training and Employment division, Rano said in Jayapura on Tuesday (9/6/2015) about 49 foreign workers from United States (USA) hold Temporary Residence Permits.

“Besides in Mimika, foreign workers are also working in Merauke, Biak Numfor, Jayapura, Nabire and Jayawijaya,” he said.

Rano explained the 857 foreign workers include those from USA, UK, New Zealand, Australia, Malaysia, India, South Korea, Canada, Switzerland, Germany, Singapore, the Netherlands and China.“Foreign workers who work in Biak Numfor are 22 people, 66 people in Merauke, 208 people in, 31 people in Nabire and 11 people in Jayawijaya,” Rano.added.

Previously, head of Department of Labor and Population Papua, Yan Piet Rawar said it would interlace cooperation with the Department of Revenue (Revenue) Papua to work on local regulations on taxes for foreign workers who work in Papua.“We’re working on that rule, where a tax for foreigners will be adjusted to the field work,” Rawar said.

He explained, an expatriate will be taxed if he works in mining and certain educational fields. “While working in the social field will not be taxed,” he added. (Munir/ Tina)

Jayapura, Jubi – To strengthen cooperation in socio– cultural fields with Sandaun Province in Papua New Guinea (PNG), the Papua provincial government held a training program particularly in the field of carpentry and cosmetology.

Assistant Public Affairs Regional Secretariat Rosina Upessy said the training skills in carpentry and cosmetology were attended by 20 young men and women from both countries.“The 20 participants consists of 10 from Papua and 10 from Sandaun Province, PNG,” she said in Jayapura on Monday (8/6/2015).

She further explained that the aim of training is also to strengthen cooperation between the Governments of Indonesia and Papua New Guinea.“I hope this training can make an impact on social life, culture and economy in border communities, especially for young men and women,” she stated.

Meanwhile, Consul General of PNG to Jayapura Aria said the vocational training between the two countries is also to promote their respective areas.“With this training, the people of PNG can also learn about the culture so that they can get to know more about the culture of Indonesia, especially Papua,” he added. (*/ Tina)

Timika, Jubi – Papua Bank will launch a loan program to support Micro Small Medium Enterprises (SMEs) which will be devoted to women.

“The program is ready to launch in the near future,” chairman of Bank Papua Branch in Timika Papua, Bertha affar said on Monday (8/6/2015).

She explained that woman entrepreneurs will get loan from Rp. 500 thousand to Rp.50 million each without any collaterals.“We’ll give credit to the women of SMEs and it does not require collaterals, as long as they have a business,” she said.

Bertha said the interest rate that will be charged by the Bank of Papua to SMEs will be notified at the launch later.“Again I want to emphasize that this loan is given only to women’ entrepreneurs of SMEs. Of course, I would invite all media to attend the launch,” she added.

One of the women entrepreneurs in Timika, Yenny, said she is very pleased with this program and hoped to be realized well.“There must be consequences in a program ,but the more important is how banks can help the people of Papua to help people, “he said. (Eveerth/ Tina)